The Times, They Are Hurting

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[The Way Ed Sees It]

When I look at a chart of the stock price of The New York Times Companies, I am reminded of the 1960s hit by The Chambers Brothers, "The Time Has Come Today."
Very fitting message for The New York Times.

For all its self-promotion as the "paper of record," The New York Times has not been so transparent to its shareholders. The Sulzbergers, the family that controls The New York Times by means of a class of stock with super voting rights, has always looked out for its own interest.

The Sulzberger family has always promoted the family interest. Thus in May 2007, the Sulzbergers and the Board raised the quarterly dividend from 17.5 cents per share to 23 cents per share. This was done at a time of declining revenue at a cost to the company of approximately $30 million per year.

The reason for this increase in dividends is that the Sulzberger family is largely dependent upon its dividend receipts as a source of income.

Acknowledging the error of its ways, in November 2008, The Times lowered its quarterly dividend to six cents per share. On February 18, 2009 The Times eliminated its dividend-with the stock price at an all-time low of $3.51, which is cheaper than the price of $4 for its Sunday edition. These two belated cuts in the dividend will save The Times $133 million annually with approximately $35 million coming from the elimination of the six cent dividend.

But there are other huge missteps.

Thus in 1993 The Times spent in excess of one billion dollars to purchase The Boston Globe. Then in 2003 with financial prospects dimming, the Times refused to sell the Globe to Jack Welch and a group of investors for $500 million. Currently The Boston Globe has been valued at $20 million to $170 million. I believe that $40 million is a fair value for The Boston Globe.

The Times also had a stock repurchase agreement until 2003 and repurchased $400 million of stock to fund its employee stock-based benefit plans and for general corporate purposes- this when the price of a share of New York Times stock was trading at $40.

In November 2006 I wrote to The New York Times and stated that The New York Times must write off $600 million of its purchase price of The Boston Globe and its affiliates. In December 2006 The Times wrote off $800 million.

In December 2007 I wrote to Kenneth Richieri, General Counsel of The New York Times. In this letter I stated that I had been informed in August 2007 that the Sulzbergers had engaged in talks to take The Times private.

Several months later The Times acknowledged that the Sulzbergers had approached Bloomberg Media to take the company private.

If The Times had not made the mistake of increasing its dividend and repurchasing its stock, The Times would not be in its present predicament. And if The Times had not purchased The Boston Globe, The Times would be in Nirvana.


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